How in the hell can the combined company only add 500,000 new subs in the 2H of '08?

Today SIRI lowered subscriber guidance for '08 and '09. The new '08 guidance calls for a total of 19.1 million subscribers - which equates to only 500,000 new subscriber adds for the whole 2nd half of '08......

How in the hell can the combined company only add 500,000 new subs in the whole second half of ‘08? That seems way too low to me! They should be able to add way more than that in Q4 alone!

The combined company has added well over 1 million new subs in just the fourth quarter alone for the last 4 straight years in a row now!

Maybe they are taking into consideration that no new product or very little on shelves in stores for xmas and the slowdown in auto sales 4th Q. Maybe they feel better to announce that now and adjust after 4th Q in this looming economy?

If we use the 500,000 you posted for the second half of 08, Then the 150,000 a month for 09 as they now predict is pretty poor.

Retail is dead, SiriusXM at some point in 08 must have made the decision not to spend any money promoting that sales outlet.

That is a shame, because as long time stockholders we saw what Sirius did with the arrival of Stern, those sales were not OEM but retail for the most part.A lot of people that bought radios at that time do not even listen to Stern, but got caught up in the marketing about sat radio.

The 4th quarter as you stated has always been very good for Sirius and XM until this year.

Makes you wonder why???

At these sub numbers the RS and issue of more shares dilution becomes very possible.Taking the company private may still be the main goal of the mangement.

I don't trust the mangement and from the time of the bad loan at the merger it has all been down hill.

How in the hell can the combined company only add 500,000 new subs in the whole second half of ‘08? That seems way too low to me! They should be able to add way more than that in Q4 alone!

HYPOTHETICAL SUB MODEL:

End of Q2 XM subs: 9.33 million
End of Q2 Sirius subs: 8.64 million
Total subs: 17.97
+
End of Q3 XM subs: 9.65 million
End of Q3 Sirius subs: 8.92 million
Total subs: 18.57
+
End of Year sub estimate: 19.1 million
Average number of subs for 6 months: 18.55 million

My model originally estimated XM and Sirius to sell approximately 1 million at retail in 2H of 2008, which was a 28% YoY drop from 2007 (which was approximately 1.35 million).

Assuming that that drop is no longer enough -- and retail has dried up this year... if you drop it another 20% from there (which would be 40% YoY overall)... that implies gross retail sales of 800,000 (down from 1.35 million in 2007).

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OEM ADDITIONS

My model originally estimated XM and Sirius to install approximately 4.0 million in 2H of 2008, which is approximately 52% of the 7.7 million OEM installs originally estimated for both combined in 2008.

Then comes the auto sale plummet of 2008 -- this lowers sales by a minimum of 25% and likely closer to 28% (average for 2H). So take out 28% from my 4 million installs, you're left with 2.88 million installs/sales.

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Add the gross retail and the OEM gross above, I get 3.68 million in gross sales. Take out the 3.12 million in churn for the 2H of 2008 from that, and I'm left with approximately 560K as the total NET additions for XM and Sirius combined in 2H of 2008.

The question I have is... if gross sales drop from the earlier predicted 5 million (oem and retail combined) -- down to 3.68 million, that's a drop of 27%.

So with 1.3 million in fewer sales, wouldn't that drop the SAC/CPGA related expenses by a good amount too? Afterall, SAC/CPGA for the most part isn't charged until the unit is sold, no? So wouldn't this help earnings and cashflow during the quarter somewhat? I can't see why it wouldn't, unless the SAC/CPGA expenses are the same regardless of the number of vehicles sold... which I really don't think is the case.

The question I have is... if gross sales drop from the earlier predicted 5 million (oem and retail combined) -- down to 3.68 million, that's a drop of 27%.

So with 1.3 million in fewer sales, wouldn't that drop the SAC/CPGA related expenses by a good amount too? Afterall, SAC/CPGA for the most part isn't charged until the unit is sold, no? So wouldn't this help earnings and cashflow during the quarter somewhat? I can't see why it wouldn't, unless the SAC/CPGA expenses are the same regardless of the number of vehicles sold... which I really don't think is the case.

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Perhaps this helps explain why the revenue and cash flow projections for 2009 and 2010 remained static despite the lowered sub guidance.